It can be appreciated that automated clearinghouses (i.e., an establishment maintained by a third party with the purpose of settling mutual claims and accounts; a central agency for the transmission and distribution of claims information) have been in use for some period of time, especially for the submission and payment of healthcare claims (i.e., requests for payment for healthcare services provided to a patient; commonly referred to as “bills”). Healthcare claim submission and payment is a process that many have attempted to refine by using some form of claims management software. Specifically, software has previously been offered that can receive claim information from a healthcare provider (e.g., a physician, hospital, or medical laboratory), break the data elements into a standard set, give each claim a unique identifier, submit the claim information to a payer (typically an insurance carrier or a government agency), accept payment (also termed a remittance; a remittance, as is applicable to healthcare, is the payment and explanation of that payment produced by a payer and sent to a provider and comprising the adjudication and payment information) for the claim from the payer, and administer that payment back to the provider, all with limited or even no human interaction.
One common problem with known methods for claims submission occurs when a healthcare provider submits a claim to a payer and does not receive payment of that claim in a timely fashion. The provider, after a period of time, may send out another bill, or “second notice” claim, to the payer. The payer, not realizing that both claims are for the same service, often eventually pays both claims in error, resulting in a duplicate payment to the provider. This problem occurs because both parties (payer and provider) are operating through many disparate systems and do not have access to a transparent set of data. This problem also occurs because the clearinghouse acts merely as a pass-through between the payer and provider, meaning that the clearinghouse only passes information back and forth, and generally does not store claim or remittance information for any significant period of time. Further, these problems also occur because the known methods of claims submission generally include intensive human interaction, providing many opportunities for errors to occur. These problems may also occur due to various computer system (typically software) and/or human errors that cause the same bill to be generated and submitted multiple times in error, in conjunction with both the initial billing and subsequent billings. The administrative cost incurred by both parties to resolve these duplicate claims is significant and raises the cost of healthcare. Duplicate payment may also occur in the absence of duplicate billing—resulting instead from errors in the payers' processing of payments. Duplicate payments remitted via a clearinghouse are typically not detected until after the provider has received the duplicate payment because the clearinghouse has no method by which payments are stored and validated for accuracy against the provider's original or adjusted bill.
Another common problem in known claims management systems involves errors in both claims submission and payment of a third party liability-related claim (i.e., claims for which at least some portion of the amount due is to be paid by a third party payer). The payment of a healthcare claim may be the responsibility of the patient alone, such as if the patient is uninsured or the service provided is not covered by the patient's insurance. The payment of a healthcare claim may be the responsibility of the patient's medical insurance provider, which may be a private insurance carrier or a government agency such as Medicare or Medicaid. The payment of a healthcare claim may be the responsibility of a third party payer, such as a homeowners insurance carrier (e.g., if the patient is injured by falling on an icy sidewalk), an automobile insurance carrier (e.g., if the patient is injured in a car accident), a workers compensation insurance carrier (e.g., if the patient in injured at work), or an excess/supplemental liability insurance carrier (i.e., an insurance company that offers policies that supplement a patient's primary insurance coverage). The payment of a healthcare claim may be the responsibility of any combination of the above-described payers.
The many complexities of the third-party liability claims payment process complicate payment, and carriers often pay an incorrect amount due to a lack of information regarding coordination of benefits between insurance carriers (coordination of benefits refers to a provision within a healthcare reimbursement schedule that provides that, when a patient is covered under more than one insurance plan, the patient is entitled to benefits up to, but not exceeding, the total allowable expense). This breed of administrative error can be much more complex to resolve than a standard duplicate claim, as it is generally necessary to refund and re-bill the claim to resolve the error. This sort of errant claim can also be much more time consuming to resolve, as most providers do not bill what is presumed to be the secondary carrier until payment has been received from the primary carrier. If the provider has submitted the bills in an incorrect coordination of benefits, the provider may be waiting for a remittance from a payer who does not intend to pay (generally because the payer is often able to immediately recognize upon receipt of the claim that the payer is not the primary payer). Additionally, the provider may bill all payers at once and receive an incorrect payment from the secondary payer who has paid as a primary payer due to the incorrect billing. A refund and re-bill is generally required to resolve such problems.
The above described problems result from the manual processes and the lack of transparency between billing and adjudication systems that exist today, and contribute to a disjointed process which results in huge inefficiencies and excessive, but avoidable, administrative costs. When a payer or provider discovers that a claim has been paid incorrectly, either as a duplicate or from incorrect third-party liability reimbursement, the administrative costs incurred to resolve the claim is significant. The standard process generally involves paper letters to the provider from the payer requesting the payment to be refunded, phone calls between payer and provider to resolve various data elements, faxes between each party to provide documentation for discrepancies, and often the usage of data mining and/or collection agencies. Preventing incorrect reimbursement of claims is important to keeping the administrative cost of post-payment resolution of errant claims at a manageable and reasonable amount.
These inefficiencies are graphically captured in FIGS. 1-4. The illustrated flowcharts provide graphical examples of what current claim and remittance processing entails, and they also highlight representative problems that may occur during such processing. FIG. 1 is a flowchart depicting the process in which a provider submits a bill to be paid by the payer through a clearinghouse. The flowchart of FIG. 1 also depicts the process in which a payer submits a remittance back to the provider through a clearinghouse. FIG. 2. is a flowchart depicting the process in which a provider identifies third party liability. The flowchart of FIG. 2 also depicts the cumbersome and time-consuming process in which the provider refunds money to a misidentified primary guarantor that has already adjudicated and paid on a claim. FIG. 3. is a flowchart depicting the process in which a provider refunds a duplicate payment to a payer for the same bill. The flowchart of FIG. 3 also depicts the process in which the payer may deny the refund and send the refunded money back to the payer. FIG. 4. is a flowchart depicting the process in which a provider sends a bill to the payer for adjudication and payment. The flowchart of FIG. 4 also depicts the process in which the provider may submit a duplicate bill if the provider has not received an 835, remittance and/or payment from the payer according to the provider standard timeframes. As can be appreciated by reviewing FIGS. 1-4, the prior art comprises a disjointed process which results in huge inefficiencies and excessive, but avoidable, administrative costs. The prior art figures only capture examples of prior art methods. The figures are thought to be helpful in understanding the applicant's invention and how it improves upon the prior art techniques.